When Long-Run Average Costs Rise as Output Increases, the Firm

question 103

Multiple Choice

When long-run average costs rise as output increases, the firm is experiencing

• A) diseconomies of scale.
• B) diminishing returns.
• C) constant returns to scale.
• D) economies of scale.

---

Definitions:

Molten Rock

Liquid rock material formed under the earth's surface at extremely high temperatures, known as magma, or on the surface as lava from a volcanic eruption.

Methanol

Methanol, also known as methyl alcohol, is a chemical compound used as a solvent, antifreeze, fuel, and as a denaturant for ethanol. It is toxic to ingest.

Ethanol

A biofuel derived from corn, sugarcane, or other plant materials, used as an alternative to gasoline.

Windmill Capacity

The maximum output of power, typically measured in megawatts (MW), that a windmill or wind turbine can produce under ideal conditions.